TL;DR
FAME-II subsidy cuts have increased electric two-wheeler prices in India, forcing manufacturers to adjust strategies, localize components, and seek cost optimization, aiming for long-term sustainable growth despite short-term sales impacts.
Recent adjustments to the FAME-II (Faster Adoption and Manufacturing of Electric Vehicles) subsidy scheme have sent ripples through India's electric two-wheeler market, prompting manufacturers to recalibrate their strategies and pricing. The reduction in per kWh subsidy rates has inevitably led to an increase in the ex-showroom prices of electric scooters and motorcycles, impacting consumer affordability and demand. While the government aims to encourage local manufacturing and reduce reliance on imported components through these revisions, the immediate effect has been a temporary slowdown in sales for some players. Manufacturers are now focusing on optimizing costs, localizing more components, and exploring new business models, including battery-as-a-service options, to maintain competitiveness. Industry experts believe these changes, though challenging in the short term, will foster a more sustainable and self-reliant EV ecosystem in the long run by pushing companies towards greater efficiency and innovation rather than solely relying on subsidies. The market is expected to stabilize as companies adapt and new, more cost-effective models emerge.